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PM calls for innovators in tourism

Rt Hon John Key
Prime Minister
Minister of Tourism

1 July 2013 Media Statement

PM calls for innovators in tourism

Prime Minister and Tourism Minister John Key today released criteria for applications for funds from the Tourism Growth Partnership, a new government initiative aimed at boosting innovation and lifting productivity in the tourism sector.

“Under the Tourism Growth Partnership, the government is making $28 million available over four years to support innovative projects that will create new opportunities and overcome barriers to growth in the tourism sector,” says Mr Key.

The Portfolio Statement sets out the objectives of the Tourism Growth Partnership, and signals the type and scale of projects that will attract investment, as well as who can apply.

The Tourism Growth Partnership is a contestable co-investment programme. For each project approved for investment, the government will provide up to 50 per cent of the required funding.

“Tourism is one of New Zealand’s largest export earners and as such it has a crucial role to play in growing our economy. The Tourism Growth Partnership is part of a significant $158 million investment government is making in tourism as part of Budget 2013,” says Mr Key.

“The $158 million investment is focused on achieving growth in tourism earnings; however, simply attracting more, higher-spending visitors is not enough.

The domestic tourism sector must, through its marketing, distribution chains, products and services, turn this demand into value for businesses and the New Zealand economy.

“The Tourism Growth Partnership will help us capture the benefits from growing the value and number of visitors to New Zealand, it will contribute to the creation of more jobs and increased export earnings. “

The Tourism Growth Partnership will be administered by the Ministry of Business, Innovation and Employment (MBIE). MBIE will open the first funding round later this year and will call for investment proposals at that time. Full details will be published on the MBIE website.

Mr Key says that the Tourism Growth Partnership is a great opportunity for the tourism sector to identify and respond to new market opportunities.

“New Zealand is a nation of innovators. I encourage the tourism sector to start thinking now about developing proposals for investment, and I look forward to seeing what businesses and tourism providers can achieve through this investment.”

ENDS


Tourism Growth Partnership

Frequently Asked Questions

What is the Tourism Growth Partnership?

The Tourism Growth Partnership is a government initiative that will co-invest in projects that will help the tourism sector achieve greater commercial and wider returns from high-value international visitors.

What is meant by “co-investment”?

If your project is approved, the TGP will provide up to 50 per cent funding for the project.

That is, you will invest at least 50 per cent and the TGP will invest no more than 50 per cent.

Note: The applicant contribution must be monetary. ‘In-kind’ contributions will not be counted against the required co-investment criteria.

TGP funding for approved projects will be linked to key milestones, including the activities needed to achieve these milestones – and these will be set out in funding agreements.

The government will not take an equity stake in projects or retain rights to any intellectual property arising from projects.

How much is the government investing in the TGP?

In Budget 2013, the government allocated the TGP $8 million per annum from 2013/14 ($7 million of new funding, with the remainder of the funding coming from the former New Zealand Tourism Strategy Implementation Fund). This funding will be on-going.

In what sort of projects will the TGP invest?

Investment will focus on projects that contribute to one or both of the following objectives:

• boosting innovation in the tourism value chain, so as to ensure that New Zealand gains more from the international visitor spend

• lifting the productivity of the tourism sector.


TGP investments will be demand-led. They will reflect international market demand and generate commercial returns.

Projects may operate across the international tourism value chain, including market development, distribution, and product and service development.

TGP investments will also need to be additional to existing or planned activity. For example, it is unlikely that the TGP would invest in activity that a tourism business would typically fund as a matter of course, such as attendance at an international trade show.

Investments should also not duplicate existing central government investment in tourism.

To attract TGP investment, projects must satisfy eligibility and assessment criteria. This includes being able to generate commercial returns and benefits that extend beyond co-investors, particularly wider benefits to the tourism sector.

The TGP will be managed as a portfolio of projects. The Minister of Tourism will regularly issue Portfolio Statements to provide guidance on the current priorities for the TGP portfolio.

These Portfolio Statements will be developed in consultation with industry stakeholders to ensure investments:

• align with government priorities for tourism

• are relevant to the strategic direction of the tourism industry

• remain relevant in a changing market environment

• fit with the mix of investments in the portfolio.


Both the eligibility and assessment criteria and the latest Portfolio Statement can be found at: http://www.med.govt.nz/sectors-industries/tourism/tourism-growth-partnership

Some of the information about the TGP refers to “high value visitors”. Who are “high value visitors”?

High value visitors are typically those who generate the greatest returns for New Zealand through higher spending, enabling greater profitability and productivity for New Zealand businesses. They may also have a higher likelihood of generating economic benefits for sectors other than tourism (or tourism may not be the only driver for them to visit New Zealand).

Will I have to compete against other applicants for funding?

Yes, the TGP is contestable.

Who can access the TGP?

Eligible co-investors may be individual businesses, or consortia made up of businesses and other participants. Investment and collaborative input will also be accepted from industry associations, iwi and hapu, and others.

Contributions from central government sources, including Crown research institutes and tertiary education institutions, cannot be included as part of the qualifying co-investment.

Regional or local government agencies can be part of co-investment consortia, but will need to demonstrate that their projects will deliver commercial returns and have substantial backing from the private sector, including a financial element.

Individual businesses will need to show their projects will deliver benefits that extend beyond their own operations.

Offshore businesses can also access the TGP, but will need to demonstrate that their projects will generate sufficient benefit to New Zealand.
I’ve got a great idea for a new tourism product? Can I apply for TGP funding?

Prospective applicants should note the contestable nature of the TGP. To be approved for co-investment, projects will not only need to meet the eligibility and assessment criteria, but also be ranked highly compared to other projects seeking co-investment.

The TGP will generally not invest in business start-ups; however, joint ventures or other new legal entities formed by co-investors for the purposes of the TGP will be eligible.

Is there a limit on the duration of a project that can receive funding?

Typically, TGP funding for projects will be for up to three years.

APPLICATION PROCESS

What is the process for applying?

Proposal stage

Step One: MBIE will open a funding round and call for investment proposals. There may be several funding rounds in each financial year.

Step Two: An Independent Panel of Experts (IPE) appointed by MBIE will assess proposals and determine which should be advanced. The IPE will consist of persons with expertise in international business and tourism.

Business plan stage

Step Three: Co-investors with proposals that have been identified as having merit will be invited to develop business plans. The IPE will provide advice on business plans to the Chief Executive (CE) of MBIE.

Step Four: The CE of MBIE will decide which projects will receive TGP investment.

Funding agreements

Step Five: Funding agreements will be prepared and signed by, or on behalf of, the co-investors and MBIE.

How will funding rounds be notified?

When a round is opened, it will be announced on the MBIE TGP website, and notified through the Tourism New Zealand and Tourism Industry Association of New Zealand networks. You can ask to receive notification of when rounds are opened by emailing tgp@mbie.govt.nz.

The frequency of rounds may vary, but is likely to be two per financial year.

Will proposals be accepted outside the funding rounds?

Applications may be considered outside of the normal funding rounds in exceptional circumstances. However, you should discuss your situation first with the MBIE Secretariat before submitting a proposal outside of a funding round.
How much funding can I apply for?

There are no minimum or maximum levels for the value of government investment in any individual project.

However, the scale and value of investments within the TGP portfolio will be managed as a total mix, with the aim of ensuring that the average life-time project value is approximately $500,000 (i.e. in receipt of up to $250,000 of TGP funding).

Will funding be available for smaller-scale projects?

An annual pool of $400,000 will be available to fund smaller individual projects valued at less than $100,000.

Can a single entity submit more than one proposal, or be a part of more than one consortium?

Yes, provided each proposal with which the entity is involved is distinct and meets the eligibility criteria.

Can a TGP co-investor apply for funding to substantially extend or change a TGP co-investment project that is already underway?

Minor alterations may be able to be accommodated with a variation to the funding agreement. However, significant changes or additions will require a new application.

Will MBIE help me develop my proposal for TGP funding, or help me decide which of my ideas warrants being developed into a proposal?

MBIE can provide explanations and answer queries relating to the purpose of the TGP; the eligibility and assessment criteria; and the application, assessment and approval processes. MBIE will also publish guidance to assist applicants to complete proposal forms.

However, MBIE will not coach applicants on the content of their proposals or business plans. As the Chief Executive of MBIE makes the decisions on which projects will receive TGP funding, it is important that MBIE officials avoid conflicts of interest and maintain independence.

To attract TGP funding, projects will need to be based on genuine commercial propositions – not just ideas. Applicants will be expected to be able to demonstrate the path to commercialisation that their projects will follow.

ASSESSMENT PROCESS

How will my proposal be assessed?

There are two elements to the assessment of proposals:

i. Eligibility – proposals must satisfy eligibility requirements

ii. Assessment – proposals will be assessed against criteria


When making its assessment, the Independent Panel of Experts will take into account:

• how well your proposal performed against the assessment criteria

• how well your proposal performed compared to other proposals submitted

• the amount of TGP funding available for investment.


What are the eligibility and assessment criteria?

A link to the criteria can be found at:

http://www.med.govt.nz/sectors-industries/tourism/tourism-growth-partnership

If my proposal is declined, can I resubmit?

The Independent Panel of Experts (IPE) will reach one of three conclusions regarding your proposal: a) Approve for development into a business plan; or b) Request resubmission; or c) Decline.

The IPE may request that your proposal be resubmitted with further information or changes, if it considers the proposal shows potential but needs more work.

If I am asked to develop a business plan, how long will I have to develop this?

Business plans will be expected to contain more detail and robust analysis than proposals. It is anticipated that some applicants may require up to three months to compile business plans.

Is there funding available for the development of business plans?

Funding will be linked to the activities that must be undertaken to achieve project milestones, as set out in funding agreements with MBIE.

Applicants should be prepared to fund 100 per cent of any costs incurred before TGP funding is approved and funding agreements are signed by both parties. This includes costs related to the development of business plans.

How will my business plan be assessed?

The rules and criteria used to assess your business plan are the same as for your proposal, but you will be expected to provide more detail and/or more robust analysis in your business plan.

When my business plan is assessed, what outcome can I expect?

The Independent Panel of Experts (IPE) will assess your business plan and reach one of three conclusions: a) Recommend approval; b) Request resubmission; or c) Recommend decline.

The IPE may ask you to resubmit your business plan with further information or changes, if it considers that there is not yet enough information to make a recommendation to the MBIE Chief Executive.

Whilst the IPE will make recommendations about whether business plans should be approved or declined, decisions about whether or not projects will be funded rest with the MBIE Chief Executive.
Can I withdraw from the process?

Yes, at any stage. Contact the MBIE Secretariat and let them know your intent. Any funds held in reserve for you will be released.

IF YOUR PROJECT IS APPROVED FOR TGP CO-INVESTMENT

Will I get the full amount for which I’ve applied if my project is approved?

If a project is approved for co-investment, TGP co-investment will be available for up to 50 per cent of the total funding required for the project. The actual proportion of TGP co-investment will depend on the amount for which you have applied, the total level of TGP funding available and the assessment of your project compared with other projects approved for co-investment. Decisions on the amount of TGP investment will be made at the sole discretion of MBIE.

What costs will be paid out as part of the project?

Funding will be linked to the activities that must be undertaken to achieve your project milestones, and these will be set out in your funding agreement with MBIE. You should be prepared to fund 100 per cent of any costs incurred before the TGP funding is approved and the funding agreement is signed by both parties.

What if there is a change to the project, or project participants?

In the first instance, you should notify the MBIE Secretariat of any changes. Minor alterations may be able to be accommodated with a variation to the funding agreement. However, if the original intent of the funding is significantly changed by the new arrangements, the funding may be terminated, and a new application may need to be submitted.

Will results and outcomes be made public?

MBIE will publicise TGP co-investments, including the names of co-investors, the amounts invested and a brief description of projects. Co-investments will not be publicised until funding agreements have been signed by both co-investors and MBIE.

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